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mozadek · 02-25-2009, 05:10 PM

Dubai was hit hard with the credit crunch and real estate bust. Even they needed a bail out from Abu Dhabi.

DUBAI -- Dubai stocks moved higher and interbank lending rates eased Monday after the emirate's government initiated a $20 billion bond program, half of which was taken up by the U.A.E. Central Bank.

The move allayed some fears that Dubai and government-owned companies would struggle to refinance debt obligations this year.

"The issuance at this time shows that, even if international [debt] markets dry up, the federal government and central bank will step in to help Dubai," said Yazan Abdeen, an equity fund manager at ING Investment Management. "It shows a real commitment to the development of Dubai and keeps its plans intact."

The Dubai Financial Market, or DFM, jumped 7.9% to 1652.98. The DFM shed 72% of its value last year.

Government-linked companies such as real-estate developer Emaar Properties PJSC and Dubai Financial Market PJSC paced the advance, both rising 15%.

In credit markets, the three-month Emirates Interbank Offered Rate traded at 3.39%, down sharply from 3.43% Saturday, a Dubai-based trader told Zawya Dow Jones.

Spreads on credit default swaps, or CDS, also tightened significantly.

Government companies such as developer Nakheel PJSC saw their spreads widen last year on concerns they would default on debt obligations as international credit markets dried up. Nakheel has $3.5 billion to refinance in Dec. 2009 when its sukuk, or Islamic bond, expires.

The U.A.E. department of finance said late Sunday that the $20 billion bond program would be used for Dubai to meet its financial obligations and continue its development program.

The bond is an unsecured fixed rate paper yielding 4% a year with a five-year maturity, the statement said. Dubai and state-owned company debt totaled about $80 billion at the end of 2008.

"Although we believe that Dubai is still very much in the midst of an economic downturn ... this outcome is a big shot in the arm for sentiment on the Dubai exchanges," said Ian Munro, head of research at MAC Capital Advisors, a Dubai-based investment-banking firm.

02-25-2009, 05:10 PM
mozadek Confirmed User Join Date: Feb 2008 Posts: 1,325	Dubai was hit hard with the credit crunch and real estate bust. Even they needed a bail out from Abu Dhabi. DUBAI -- Dubai stocks moved higher and interbank lending rates eased Monday after the emirate's government initiated a $20 billion bond program, half of which was taken up by the U.A.E. Central Bank. The move allayed some fears that Dubai and government-owned companies would struggle to refinance debt obligations this year. "The issuance at this time shows that, even if international [debt] markets dry up, the federal government and central bank will step in to help Dubai," said Yazan Abdeen, an equity fund manager at ING Investment Management. "It shows a real commitment to the development of Dubai and keeps its plans intact." The Dubai Financial Market, or DFM, jumped 7.9% to 1652.98. The DFM shed 72% of its value last year. Government-linked companies such as real-estate developer Emaar Properties PJSC and Dubai Financial Market PJSC paced the advance, both rising 15%. In credit markets, the three-month Emirates Interbank Offered Rate traded at 3.39%, down sharply from 3.43% Saturday, a Dubai-based trader told Zawya Dow Jones. Spreads on credit default swaps, or CDS, also tightened significantly. Government companies such as developer Nakheel PJSC saw their spreads widen last year on concerns they would default on debt obligations as international credit markets dried up. Nakheel has $3.5 billion to refinance in Dec. 2009 when its sukuk, or Islamic bond, expires. The U.A.E. department of finance said late Sunday that the $20 billion bond program would be used for Dubai to meet its financial obligations and continue its development program. The bond is an unsecured fixed rate paper yielding 4% a year with a five-year maturity, the statement said. Dubai and state-owned company debt totaled about $80 billion at the end of 2008. "Although we believe that Dubai is still very much in the midst of an economic downturn ... this outcome is a big shot in the arm for sentiment on the Dubai exchanges," said Ian Munro, head of research at MAC Capital Advisors, a Dubai-based investment-banking firm.